Tenure Security, Land Titles and Access to Formal Finance in Upgraded Informal Settlements: The Case of Dar es Salaam, Tanzania

Abstract

Pro-poor land policies have recently emerged in reconceptualising access to housing finance in low income settlements in developing countries. In Tanzania, this concept has been adopted to enable dwellers in urban informal settlement to enjoy perceived tenure security. Settlement upgrading has further increased perceived security. Interestingly, titling projects aimed at facilitating access to credit from formal financial institutions have been implemented in already upgraded settlements. Based on empirical investigations in two settlements in Dar es Salaam, the paper explores the take-up of titles and subsequent use to access credit. Findings show that take-up is slow and very few property owners have accessed credit. In contrast to arguments by several scholars, tenure security is not a simple matter of being legal or illegal or formal or informal. In the illustrated cases, loans were neither used to improve houses nor open businesses, but to expand on-going profitable businesses. Loans were repaid and no property has been taken away, presenting a win-win situation. The paper concludes that the use of titles to expand on-going profitable businesses provides new lens with which to look at alternative uses of residential licenses (RLs). Through this lens, property owners were able to use titles to access relatively large microenterprise development loans. It recommends further, that there is a need to promote the acquisition and use of titles. Financial institutions are challenged to design and implement context specific housing microfinance products that make ownership of RLs a necessary condition for accessing loans.